CBIC sets one-year time limit to complete investigation on GST evasion/fraud cases

Shishir Sinha New Delhi | Updated on September 23, 2021

Experts feel such a move will ensure that cases do not get time-barred

The Central Board of Indirect Taxes & Custom (CBIC) has set a one-year time frame to complete the investigation on cases of GST evasion and fraudulent Input Tax Credit (ITC). Experts feel that such a move will help the department ensure that cases do not get time-barred.

Pending cases

The instruction issued by GST Investigation Wing called for top tax officials (Principal Director General(s)/Principal Chief Commissioner(s)/Chief Commissioner(s)) within their jurisdiction to take stock of the pending investigation cases/other cases that warrant issuance of showcause notices and take appropriate action to ensure the timely completion of investigations and issuance of SCNs well before the last date.

This issue is critical as the last date to file the annual return for first three years (2017-18, 2018-19 and 2019-20) of GST is already over and the time frame for issuing order in case of any discrepancies has kicked in.

The board also observed that when compared to the number of GST evasion cases and fraudulent ITC cases, the number of showcause notices have been less during these three years.

Provisions of the GST Act set a time limit of three years and five years for issuance of orders. Considering this, the board felt that if the issuance of SCNs is pushed to close proximity of the end dates/last dates, it may leave very little time with the adjudicating authority to pass orders within the stipulated period mentioned in the Act. “This might result in a situation where either the adjudicating authority is not able to pass orders within prescribed time period or quality of adjudication suffers. It is felt that the present situation warrants for extra efforts on the part of field formations and strict monitoring at supervisory level,” said the instruction.

Aditya Singhania, Founder at Singhania’s GST Consultancy & Co, said that instruction to complete investigations, issuance of showcause notices and its timely adjudication, aims to shield cases from getting time-barred under section 73/74 (of GST Act), both in respect of non-fraud/fraud cases for protecting unaccounted tax revenue.

“This demands preparedness of taxpayers to ensure complete reconciliation of their returns filed vis-a-vis books of accounts, so that differences if found out can be smoothly substantiated. This comes as no surprise as the department has already started conducting audit of the assessee; however, the instruction will certainly force conducting audits of multiple years on cumulative basis,” he said.

Published on September 23, 2021

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